Lemon laws would have more juice

Imagine you’ve just bought your dream car, and the first time you go for a drive it won’t start. Maybe this is just one unlucky occasion, or perhaps you are one of the unfortunate people who has bought a “lemon”. Is it time for lemon laws?

There is no legal definition in Australia of a “lemon” but, although lawyers have not yet defined it, everyone knows what it means.

The US and UK already have so-called “lemon laws” that are based on setting limits to the number of:

  • Faults a new car can have
  • Unsuccessful attempts to fix a problem
  • Days a new car can be off the road for repairs.

If a new vehicle goes beyond these legal limits, it is considered to be a lemon.

Australian Consumer Law says

The Consumer Action Law Centre (CALC) wants Australian Consumer Law to borrow from lemon systems in Singapore and New Zealand. In Singapore, it is up to the car retailer to show the vehicle was not defective when it was sold. The consumer does not have to prove it was defective. New Zealand set up a specialist tribunal just for disputes over cars.

Legal Aid NSW, West Justice, and the Consumer Credit Legal Service want clear lemon laws and a specialist vehicle tribunal in Australia.

The CALC has created its own definition of a lemon as a vehicle that:

“has been repaired at least three times by the manufacturer or importer and the vehicle still has a defect, or if the vehicle is out of service for 20 or more days in total due to a defect”.

Currently the motor vehicle industry guide to Australian Consumer Law says a major failure to comply with consumer guarantees is when:

“a reasonable consumer would not have bought the motor vehicle if they had known about the full extent of the problem.”

Trades Associations say

Both Australian Automotive Dealer Association and Motor Trades Association of NSW believe consumer protection against lemons is sufficient. They say rewriting the law or spending more money on another tribunal would be an unnecessary taxpayer expense.

Yet Choice magazine found two-thirds of new car buyers had had problems with their vehicles in the first 5 years. Unfortunately, 15% of buyers never resolved them. Choice also found 16% of new car owners with problems were forced to sign a confidentiality agreement to get a remedy. That’s right – they couldn’t tell anybody about it!

No brand Choice surveyed had less than 44% of problem cars.

ACCC says

The Australian Competition and Consumer Commission (ACCC) receives a high volume of complaints about new cars. Itis currently seeking information from the public for its study of the new car industry. It will examine:

  • Warranties and guarantees
  • After sales service
  • Repair and service information
  • False and deceptive practices in, eg, fuel consumption and car performance
  • Consumer expectations of car purchasing.

Your say

Interested parties can submit to the ACCC in writing or by completing an online questionnaire, by November 14 2016. The ACCC aims to release a draft report for comment in mid-2017 and a final report in late 2017. If you have ever bought a lemon, this is your opportunity to have a say.

Corrina Baird

Writer and expert

Corrina used to lend her car to her kids and discovered first hand what Ls, Ps and demerits mean for greenslips. After 20 years of writing and research in financial services, she’s an expert in the NSW CTP scheme. Read more about Corrina

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